Peer‑to‑Peer (P2P) & Alternative Lending Platforms in South Africa

Why this works:

P2P platforms let you fund small loans or business invoices and earn interest. Returns can be higher than bank deposits but carry credit & platform risk.

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Good for:

Investors with R5,000+ who want higher yields than an ordinary savings account and can tolerate some credit risk.

 

Ballpark start cost:

R5,000–R50,000 (you can start low and scale).

Time to first income:

1–6 weeks (platform signup → funding → loan allocation).

Target net returns (example):

Varies widely; platforms advertise 6–15% gross — net depends on defaults & fees. Always model conservatively.

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Tools & accounts you’ll need

• Local P2P platforms (research active SA platforms).

• Bank account for funding (FICA ready).

• Spreadsheet or portfolio tracker.

Step‑by‑Step (practical)

1. Research & shortlist platforms (1–2 days).

   • Check track record, origination volumes, default rates, secondary market availability, and transparency of loan-level data.

   • Read the platform’s T&Cs, fee schedule, and user reviews.

2. Register & complete KYC (1–3 days).

   • Upload ID & proof of address; link your bank account.

3. Understand product types (hours).

   • Consumer loans vs. business loans vs. invoice financing. Different risk/return profiles.

4. Start small & diversify (initial funding).

   • Begin with a test allocation R5k–R10k across many small loans rather than one large loan.

   • Use any built‑in auto‑invest rules to spread across borrower grades and terms.

5. Set allocation rules (1–2 hours).

   • e.g., 80% short‑term (6–12 months) lower‑risk loans; 20% higher‑yield riskier loans.

6. Monitor weekly for the first 3 months.

   • Watch payment performance, defaults, and platform communications.

7. Reinvest repayments automatically.

   • Turn on auto‑reinvest where available to compound returns.

8. Withdraw a portion quarterly for re‑balancing.

   • Take profits or reallocate to new platforms if risk/returns change.

Automation

• Use auto‑invest rules to diversify across loans.

• Set calendar reminders for quarterly portfolio reviews and tax record export.

Compliance & tax (high‑level)

• FICA required for account opening.

• Interest income and capital losses must be declared in your ITR12. Keep csv/statements.

• If you lend via a business, consider company tax implications.

Risks & mitigations

• Platform risk: Choose established platforms, diversify across platforms.

• Credit risk: Diversify across many small loans; avoid concentration.

• Liquidity risk: Some loans are illiquid; use platforms with a secondary market if you need early access.

KPIs to track

• Net annualised return (after fees & defaults).

• Default rate.

• % of portfolio auto‑invested.

• Liquidity coverage (cash buffer vs maturing loans).